Kiwi gains on upbeat US data

The New Zealand dollar gained against the greenback overnight after better-than-expected US data lifted appetite for risk currencies.

The kiwi recently traded at US79.13 cents, up from US78.97c at 5pm yesterday, while on the Trade Weighted Index of major trading partners' currencies it rose to 71.92 from 71.67.

Activity on currency markets appeared to mirror yesterday's pattern with short term data hits out of the US boosting investor sentiment ahead of the European Union Leaders' Summit.

Official US durable goods numbers for May showed new orders rose by 1.1 per cent compared to the previous month, beating a Bloomberg consensus forecast of a 0.4 per cent gain.

US new home sales for May showed a strong monthly surge, up 5.9 per cent versus April, ahead of the 1.2 per cent improvement predicted by another Bloomberg poll.

That saw US and European equities chalk up another day of gains, with the Standard & Poor's 500 Index gaining 0.96 per cent to 1332.69 in afternoon trade, while the Stoxx 600 Index closed 1.35 per cent higher at 245.87.

Still, concerns over the European sovereign debt crisis were ever present, with German Chancellor Angela Merkel again voicing her refusal to the issue of common eurozone bonds.

The announcement, made in the German parliament, was the third this week, and comes as investors appear to be turning increasingly pessimistic on any real policy measures emerging from the EU summit, which starts early Friday morning New Zealand time.

That played out on the kiwi crosses, with the New Zealand dollar recently trading at 63.45 euro cents, a four month high, up from 63.16 euro cents at 5pm yesterday.

Mike Jones, a market strategist at Bank of New Zealand, said the kiwi is likely to remain locked in its recent ranges in the run up to the meeting, but "a failure by European politicians to take decisive action would still likely see some near-term paring of risk appetite, and a pull-back in pro-cyclical currencies like the New Zealand dollar and Australian dollar."

Today's National Bank business outlook survey is likely to be the highlight of the local trading day, although its impact on the currency is expected to be minimal. BNZ is expecting business confidence to weaken on the back of the escalating European crisis but for local indicators to remain firm.

On the crosses, the kiwi recently traded at 78.50 Australian cents, little changed from A78.46c yesterday, and it rose to 63.16 yen from 62.74 yen. The New Zealand currency rose to 50.83 pence from 50.51 pence.

The kiwi may trade between a range of US78.45c and US79.45c, Jones said, with further consolidation in store in the run up to the eurozone meeting.